Middle East ABBs gather momentum: IFR
While the Middle East's IPO pipeline continues to remain robust, bankers and investors are optimistic about the expansion of secondary offers, and accelerated bookbuilds in particular.
'Government-led companies have started to realise liquidity is an issue and now see more to be done with secondary offers,' said a regional investor. 'It makes sense for them to come to market with a stake that allows a deepening of the market.'
A number of regional bankers said they have been approached by issuers regarding offers from private and state-backed companies.
One banker in the region described ABBs as the likely theme of the year with March's sale in Rasan providing an example of a venture capital seller in a mid-cap company, in contrast to deals that have generally involved large state-backed names.
One regional banker recounted positive engagement from one would-be private seller until the prospect of selling at a discount to the market price was raised.
Many secondary offers such as those by Adnoc subsidiaries and Aramco have been dominated by international accounts.
'The clear objective with Adnoc Gas was MSCI inclusion,' said Mostafa Gad, global head of investment banking at EFG Hermes. 'Internationals were knocking on doors and saying they need stock and want blocks.'
A manager at a multi-family office in the region said there are many family offices that could move quickly and said local money is more than sufficient to provide coverage for ABBs.
One gap is retail investors, which while typically responsible for large demand in IPOs are not eligible to take part in ABBs due to regulatory restrictions.
European markets have in recent years seen the growth of retail platforms for ABBs such as PrimaryBid and RetailBook but the first regional banker said such digital platforms are unlikely to emerge until regulations change.
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